Not all that glitters in Monaco is golden

JON VAN HOUSEN and MARIELLA RADAELLI

Ruled by the descents of a noble Genoese family and just 26 km from the border of Italy, the principality of Monaco today seems a setting from a James Bond movie, a place where the impossibly elegant and rich gather to gamble, entertain themselves and sigh over the state of the world.

But not all is luxury brunches and Lamborghinis. Monaco and its famed district of Monte Carlo still feel the raw pulse of human nature and the world economy.
Not all glitters in Monaco
Opulence reigns at the Monte Carlo Casino, but reality still plays its hand.

Many Monegasques, as residents of the principality are known, might live in the tax haven to protect their fortunes, but they are subject to the same foibles as other mere mortals, perhaps synergized by the heady mixture of opulence and complex wealth management issues.

And the outside world is just a stone’s throw away. Surrounded by France on three sides, tiny 2-square-kilometer Monaco feels the vagaries of the world economy. Gaming revenues are down, and perhaps more ominously, the country has been pressured into joining global asset reporting conventions.

The Société des Bains de Mar (SMB), the publicly traded owner of the famed Monte Carlo Casino and other gambling and hotel properties, lost 32.8 million euros from 2016 to 2017. Betclic Everest Group, another gaming company in Monte Carlo, registered a deficit of 4.2 million euros in the period due to “great competition in France”, said a company statement.

At a recent meeting SMB President Jean-Luc Biamonti said the casino operator “just experienced the most challenging two years of our society”.

Gaming revenues fell 6 percent due to a 9 percent decline in the number of clients at the gaming tables, said Biamonti, who termed it “a severe drop”. He is now giving priority to the gaming sector with “many initiatives put in place to promote Monaco, like the surreal dinner in the casino that allowed us to get back in touch with clients who weren’t coming anymore”.

Also looming on the horizon are new asset reporting requirements by banks. Starting in February banks in Monaco will begin to provide client information in the Automatic Exchange of Information (AEI) program managed by the Organisation for Economic Co-operation and Development, part of a global effort to fight money laundering and tax evasion.

The new system could be one reason eight credit institutions have recently closed in the principality, leaving 19 still operating. Monaco has joined the AEI following the so-called SwissLeaks scandal that sent shockwaves through the international community. A whistleblower at a bank’s Monaco operation leaked documents showing a single bank helped customers hide more than $204.5 billion in assets from international tax authorities.

Another mainstay of the Monegasque economy, some of the world’s most expensive real estate, appears to be on more solid ground. According to a report from local statistics agency Imsee, real estate transactions in the principality totaled 1.79 billion euros in 2015, a decline from the 2.05 billion in 2014, but a huge improvement from the 496 million euros in sales concluded in 2009 during the global economic crisis.
Not all glitters in Monaco
Hélène Pallanca Pastor with her son Guido.

On an individual level, Monaco might offer the ultimate in luxury, but pour so much money on human nature and you can get volatile results. One example is the case of Monaco’s richest woman Hélène Pallanca Pastor. The 77-year-old Monegasque real estate heiress and her driver were ambushed in their car by gunmen in nearby Nice, France. Both would eventually die from their injuries. Her son-in-law Wojciech Janowski has admitted involvement in the murders, and along with nine others, is set to stand trial in France this year. The motive, prosecutors say, was money.

Then there is the story of Edmond Safra, one of the best known private bankers in the world. Fearful of kidnapping or assassination, he turned his opulent Monaco mansion into fortress, yet would die from smoke inhalation in a bunker-like bathroom. He perished after a member of his own staff set a fire and aimed to rescue the banker to gain his everlasting trust. Police and firemen arrived in time to truly rescue Safra but were unable to breach the steel doors at his villa.

But it is by no means all gloom-and-doom in the principality. Construction recently began on a $2 billion project to reclaim land from the sea so more luxury apartments can be built over the next 10 years to provide residences for the 2,700 multimillionaires forecast to settle there over the next decade.

In fact construction noise is one of the main bedevilments for Monaco residents these days. It is annoying the well-heeled residents to the point that Prince Albert II of Monaco himself felt compelled to weigh in, asking the local press “to spread the word that the palace takes the problem of noise seriously”. Royal plans are underway to address the problem, he said.

A vote is set for next month to elect members of a national council in the constitutional monarchy, and the local press reports the prince hopes candidates will “put their personal interests aside and not run for any egotistical objective”. Bringing more quiet to the enclave is among the campaign issues.

A version of this story appeared in the Khaleej Times of Dubai.